Increase Your Coverage with Life and Term Insurance Riders

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Written by PolicyBazaar

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Published : 10 June 2016

Riders are a crucial part of insurance policies. A policy rider allows modification in an existing insurance policy to provide an additional coverage. In most cases it has been seen that riders provide additional protection against risk. If the riders are selected carefully they can add great value to a life cover. In simpler terms a rider is an added benefit which you can opt for along with your base policy for greater benefits. Available at an extra cost, a rider will allow you to customize your policy so that it meets your specific requirements. The basic purpose of a rider is to give you more than what your basic policy offers. Common examples of insurance riders include personal accident, critical illness rider and permanent disability rider.

Factors to Consider

It is important to note that riders come at a relatively cheaper cost than the basic policy. Usually they cost 5 to 10% of the basic policy. It is advisable thatyou opt for a rider at the inception of a policy. The earlier you take action, the cheaper will a rider be for you. Insurance companies do not impose restrictions on the number of riders which you can opt for. However it has been specified by the Insurance Regulator that the premium which you pay on a rider cannot exceed 30% of the premium which you pay for the base insurance policy.

Which should you opt for : A Stand Alone Policy or A Rider?

You may come across insurance covers such as critical illness and personal accident as both a standalone policy or as a rider. This may leave you confused as to whether to opt for a stand-alone policy or to go for the rider. Take note of the fact that a rider will always prove less expensive than a stand-alone insurance policy. If you are on the lookout for a specific protection for a limited duration of time, a rider is a good choice. Ideally the choice of the rider should depend on your needs. Evaluate your lifestyle, occupation and circumstances before arriving at a decision.

It is one of the most common riders where if the policyholder dies in an accident during the term of a life insurance policy, an additional amount equal to or less than the sum assured is paid to the nominee.

Critical illness Benefit rider

It is another useful rider which takes care of your medical expenses in case of a critical disease. Insurance companies have a list of critical illness and if you happen to be diagnosed with any of the diseases which lies within the purview of the insurance company, the nominee is paid an additional sum assured over and above the base policy.

Waiver of premium rider

It is an excellent rider which safeguards the policy holder. This rider overrides the policy holder’s need to make payments in the event that he loses his income or becomes permanently disabled. In this case the premiums will be waived but the cover will continue.

Accelerated death benefit rider

With this rider an insured person can use the death benefits if he is diagnosed with a terminal illness which will shorten the life span. In this case the insurer may advance 25-40% of the death benefit of the base policy to the insured.It is necessary to note that the insurance company will deduct the amount he receives as the plus the interest from what the beneficiaries will receive on the policy holder’s death owing to terminal illness

Partial and permanent disability rider

There may be situations when the policy holder suffers from permanent or partial disability due to an accident. This rider provides staggered payments which is a percentage of the total sum assured of the insurance policy.

Long term care rider

If owing to bad health the insured is compelled to stay at the nursing home or is receiving home care, this rider offers monthly payments. It takes care of the long-term cost.

Income benefit rider

In the event that the insured dies, this rider will provide a steady flow of income to the family members. When you buy this rider it is important to determine for hoe many number of years will your family receive the income benefit. The greatest benefit of this rider is that your surviving family will face lesser financial difficulties in your absence.

Before you buy a life insurance policy, understanding the riders and the provisions is one of your primary responsibility. Prior to buying a rider, ask yourself do you need the cover. An insurer will not allow you to modify a life insurance policy, but by opting for a rider, you will gain the much-needed control over the ever-changing life situations.

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